ABSTRACT
This chapter explains to economic and political developments in India in 1987 and their implications for meeting the challenge of India’s development: transforming a slow-growing and agricultural economy in which two-fifths of the world’s poor live into a rapidly growing, modern one that generates productive employment opportunities outside of agriculture. With a population of about 795 million in mid-1987, India is the second most populous country in the world. One distinguishing aspect of Indian strategy, in contrast to other large countries which also emphasized import substitution such as Brazil or Mexico, is its conservative macroeconomic policies. The actual performance of India’s public sector over the last four decades has been to drain resources from the rest of the economy. There is some truth to the cliche that Indian economic policy is a gamble on the monsoons. The industrial sector of the Indian economy is by far the most regulated.
